Not too Broken to Fix

K&L Gates

December 30, 2016

Technology employers well understand that the H-1B visa system is broken. It’s been broken since 2004, when the annual quota of H-1Bs plummeted from 195,000 to 65,000, leading to chronic shortages and implementation of a random “H-1B lottery” every April to determine which employees could work and which had to go home. The H-1B lottery has only aggravated the uncertainty for employers seeking to hire the best and brightest college graduates from our campuses.

The frustration level has grown to the point where the H-1B lottery is now the subject of a class action lawsuit. Numerous legislative efforts to restore the H-1B quota to pre-2004 levels have failed, largely over concerns about its impact on U.S. workers’ wages. These two interests are often portrayed as irreconcilable opposites: increasing the number of H-1Bs, the argument goes, would only further repress wages. Most technology employers counter that additional wage protections are irrelevant because the top-quality technology workers they hire are in such high demand that wages remain very competitive. A number of recent studies give support to both sides.

But wage protections and increased H-1Bs don’t have to be mutually exclusive. Perhaps the main problem with the H-1B is that U.S. Citizenship and Immigration Services (USCIS), the federal agency in charge of H-1B processing, isn’t doing enough to protect wages. Significantly enhanced wage protection is possible with relatively simple procedural changes in the way USCIS processes H-1B petitions.

USCIS regulations at 8 CFR 214.2(h)(11)(iii)(A)(2) authorize revocation of an H-1B petition upon notice if, among other things, the facts in the labor condition application (LCA) are not true and correct. The LCA is where the employer lists the correct prevailing wage rate for the H-1B worker. By law, employers are required to pay H-1B workers at or above this prevailing wage rate. The Department of Labor, which sets most prevailing wage rates, uses a four-level wage system. The lowest wage level, Level One, is reserved for entry-level, trainee, and intern positions. Qualified employees fall under Level Two or higher, which, as expected, corresponds to higher wage requirements.

The trouble is that USCIS isn’t routinely checking whether employers are using Level One wages for jobs that are not really entry-level, trainee, or intern positions. Such review, authorized by its own regulations, wouldn’t have to be time-consuming or complex; the employer need only show that the wage level is more likely than not correct. That can be as simple as providing a copy of the prevailing wage data used for the LCA, and if the employer is relying on a Level One wage, further proof showing that the position is truly entry-level could also be supplied.

A 2007 study by the Center for Immigration Studies claimed that using Level One wages was “by far the most significant reason for low prevailing wage claims using the OES data.” CIS pointed out in its study that “employers need only assert that a worker is in the Level One category … and pay according to that prevailing wage.”1 Although most technology employers never use Level One wages, they aren’t the only ones using the H-1B. Additional scrutiny of Level One wage-based LCAs would help reserve more H-1Bs for technology employers who pay higher wages, removing more of the uncertainty. It could also help remove the main obstacle to restoring the H-1B cap to its prior level of 195,000.